Question

In: Accounting

The following information related to Instep Company, and is available for 2014: Budgeted direct manufacturing labor...

The following information related to Instep Company, and is available for 2014:

Budgeted direct manufacturing labor - hours            22500

Budgeted manufacturing overhead costs                   315000

Costs of actual material used                                        148000

Actual direct manufacturing labor- hours                      20000

Actual manufacturing overhead costs                            300000  

There were two jobs in process on December 31,2014: job 11 and job 12:

                                                   Direct materials         direct labor

Job 11                                          4870                                 5100  

Job 12                                          5910                                 6800

Requirement:

1.Compute the overhead allocation rate

2.Compute the cost of job 11 and job 12 using normal costing

3.Calculate under-or overallocated .

Solutions

Expert Solution

1.

Overhead Allocation Rate = Budgeted manufacturing Overhead Cost / Budgeted Manufaturing Labor Hours  
Overhead Allocation Rate = 315000 /22500  
Overhead Allocation Rate = $14 per DLH

2. Hours used in two jobs in process are not provided so cannot provided calculation of cost to jobs in process

jobs 11 jobs 12
Direct Material                   4,870      5,100
Direct Labor                   5,910      6,800
Manufacturing Overhead   = $14 * DLH used   = $14 * DLH used  
Total Cost   =4870+5910+(14*DLH) = 5100+6800+(14*DLH)

3.

Manufacturing Overhead Applied = Actual Direct Manufacturing labor hours * Manufacturing Overhead Head  
Manufacturing Overhead Applied = 20000 * $14  
Manufacturing Overhead Applied = $280,000
Actual Manufacturing Overhead Cost = $300,000
Manufacturing Overhead Underapplied = $300000-280000 = $20,000

ekkarill92 answered 1 year ago
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